Young Millionaires 2005: Hiring Your First Employee

Hiring an employee is a huge step--a good worker is a boon but a poor choice can be a bane. Learn from our young millionaires' experience as they share their hiring advice.

We asked our 2005 young millionaires for their advice on hiring employees. Read their answers to help you find the best possible help.

"What I encourage people to do is to focus on how they can minimize expenses in the early days and really focus on driving revenue. I encourage people to get as far as they can through bootstrapping before considering going for outside capital. "Get to know these people outside of the office as well as inside of the office. All of the early employees I hired, I would take them and their spouses out to dinner to get a sense of who they were as people, what their character was like and how they interacted in a social setting."--Vinay Bhagat, 36, co-founder of Austin, Texas-based Convio, a provider of online constituent relationship management software and services for nonprofit organizations

"90 percent of the time I will hire based on my network as opposed to running an ad. The guy at the self-service station where I get my car filled up really impressed me. When we had an opening, I offered him a job. I always hire based on attitude and communication skills."--Chris Griffiths, 32, founder of Garrison Guitars, a manufacturer of acoustic guitars in St. John's Newfoundland

"That is really tough because unless you've done it before, you really are in uncharted waters. Talk to people who have done it and ask them what to look for."--Mike Domek, 36, founder of Crystal Lake, Illinois-based TicketsNow, the world's largest online marketplace for secondary event tickets

"At first, I felt that I needed to hire people that understood the broadcast industry, and I think this is probably a common mistake that people make is thinking they need to hire someone who understands the business. But I think it's more important to hire somebody who understands their specific trade. So if you're hiring a finance person, they need to know finance. They don't need to know the broadcast industry. I learned also not to be afraid to hire smart people within that trade. One of the challenges is thinking that you know everything related to your business best. When I brought on help, I took it as an opportunity to hire people who were more knowledgeable than me in that specific trade area."--Babak Farahi, 32, founder of Multivision Inc., an Oakland, California, company that records and broadcasts coverage for clients

"Hire slowly because I think it's critical that from your first employee to the last one you hire that they hold the same values that you do."--Doug Zell, 39, co-founder of Chicago-based Intelligentsia Coffee & Tea, a coffee roaster, retailer and wholesaler

"We like to go through a boutique service that specializes in hiring. They take a lot of the workload off of you. You're already busy enough as an entrepreneur, as an executive. Try to source that function as much as you can. They do all the pre-screening and testing and so forth to get you qualified candidates. It just cuts down your workload. You don't need additional distractions."--Jeff King, 38, co-founder of Clubfurniture.com, an online retailer of high-quality, upholstered furniture and accessories

"I have one word: wait. Employees, they're the driving force of what we do here. We have 75 employees, and a whole slew of freelance and contract workers. But if you can wait as long as you possibly can before you hire someone, do it. I love our employees, and we can't run our business without them.

"But during the startup phase, I'm glad that James and I did all of the tasks that it takes to run the company. For a couple reasons: one, I know what every single person is doing because at one stage or another, I've done it. And two, it allowed us to totally concentrate all of our energy to putting this company together and getting cash flow stable and getting out there and talking to all the customers. And if we'd hired employees earlier, we would've been in that back room, filling out payroll forms and dealing with insurance and all the other fun issues that come with human resources and we would not have been out in the community and would not have been selling ads to advertisers or talking to the council people at town hall."--Ryan Duques, 29, co-founder of Shore Publishing, the publisher of 16 community newspapers in Connecticut and Rhode Island

"Make sure to hire someone who understands the nature of a small entrepreneurial venture and can thrive in this type of work environment. Also make sure the employee can wear many hats."--Donna Slavitt, 38, co-founder of World Packaging Corp., a New York City manufacturer and distributor of promotional, private-label and licensed items

"Take your time. A lot of people want to rush to have an employee. The first employee is usually the most important. I have two pieces of advice: One, don't go into business with your best friend, because he's your best friend. Second, clearly delineate their roles and responsibilities. If there's only one employee and she's stuck doing a lot of work, you want it to be someone you can delegate to, not someone who thinks they're your equal."--Andrew Fox, 33, founder of Clubplanet.com, a New York City-based online nightlife destination service

"Research, research, research. There are a lot of questions you'd probably want to ask during an interview, but you really can't. We hired our first employee in 1996, and Joe knew him. When it came to hire the rest it was by word of mouth. But I'd say for your first hire, find somebody you know, or use your friends and family for references. The last thing you want is your first hire to not work out and be on unemployment, or be a cancer on your company."--Scott Sanfilippo, 34, co-founder of Wilkes-Barre, Pennsylvania-based Neeps Inc. and Solid Cactus, which include pet supply websites and a website development and internet marketing group

"That's actually where a lot of small businesses have a hard time: You don't have the resources when you need to hire the first person. I'm going to say the most important thing for your first hire is to have a good accountant and good lawyer and follow their advice. There's a lot of things when you start doing a payroll and are not a sole proprietor anymore. Lots of forms you have to fill out with the state, different taxes you're now required to pay, insurances you need to have. There's a lot more of an expense than you realize involved; it's not just hiring that employee."--Joe Palko, 33, co-founder of Neeps Inc. and Solid Cactus

"Make sure you do a grueling interview; get all the details out of the way. Find out their work ethic. Do as many background checks as you possibly can. Let everything be known upfront: what's expected of them, what's expected of you or your company. Look at their job history. You don't want to hire people flipping jobs every eight months to a year because that's a pattern. Find out what their goals in life are. Get all the contractual information signed up front. If you're hiring people and you work in a proprietary industry, make sure they sign all the noncompetes, noncircumvents, nondisclosures so you know that you don't teach someone how to compete against you a month later."--Joseph Semprevivo, 34, founder of Joseph's Lite Cookies, a Deming, New Mexico-based manufacturer of sugar-free and fat-free cookies and food products

"Find somebody who is not just looking for a job, but believes in your vision. More times than not when you're hiring your first employee, you don't really have the funds to go out and get the best of the best. I would much rather have people around me who believe in the vision and what we're trying to accomplish than having that Harvard MBA person sitting right next to me. These are the people I try to surround myself with to this very day. We've grown over the last few years, but I still try to bring people in who want to make a difference and want to be part of this movement."--Shawn Prez, 34, founder of New York City-based Power Moves Inc., a street promotion, marketing and event-planning company

"Our first employee was a family member, and that ended up being a disaster. I would tell them to tell the employee the worst-case scenario vs. the best-case scenario of how fast things will happen, how much they'll be paid, when they'll be advanced, how many people will be hired, what we'll be doing. Because everything invariably takes longer than you expected it to."--Joel Boblit, 29, founder of Somerset, Wisconsin-based BigBadToyStore Inc., an online toy retailer specializing in collectible action figures